The global demand for gold decreased by 2% in the second quarter of this year, reaching 921 tonnes, according to the World Gold Council.
This decline is attributed to high deposit rates and a stronger US economy. However, central banks' demand for gold in the first half of 2023 reached a record high of 387 tons, indicating positive news for gold supporters.
Despite the decrease in demand, gold remains sought after due to economic and political uncertainties. Additionally, the USD is approaching the end of a bullish cycle and is expected to enter a long bearish phase.
This decline is attributed to high deposit rates and a stronger US economy. However, central banks' demand for gold in the first half of 2023 reached a record high of 387 tons, indicating positive news for gold supporters.
Despite the decrease in demand, gold remains sought after due to economic and political uncertainties. Additionally, the USD is approaching the end of a bullish cycle and is expected to enter a long bearish phase.
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The European Union (EU) has replaced developing countries as the main gold buying markets in the world. In the first months of 2023, the total amount of gold mined also increased 2% from the record number recorded in 2018, to 1,781 tons.
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There are early signs that sentiment is starting to change, Mr. Artigas said. He added that the gold market remains in a wait-and-see mode as the Fed is keeping options open regarding its monetary policy.
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Juan Carlos Artigas, head of research at the WGC World Gold Council, said the banking crisis in May, when several US and European banks collapsed, created an event. Significant risks boost physical gold demand. Global uncertainty is "supporting" strong jewelry sales in key markets such as China.
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According to experts, a stronger USD makes oil prices more expensive. Gold "black" increases and the dollar strengthens, making gold transaction and accommodation costs also expensive. Therefore, investors took profits to reduce costs.
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Tim Waterer, lead market analyst at KCM Trade, said that the US jobs data released later this week will be an important indicator of interest rate adjustments from the Fed and this will affect affect the price of gold.
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The dollar index hit a three-week high, amid a weaker yuan after a private-sector survey showed China's manufacturing activity halted for the first time in three months. stagnant. The dollar and gold often move in opposite directions.
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The recovery of the economies of Europe and China may also slow down the rise of the dollar, thereby pulling gold prices up.
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This decrease in price was influenced by the strength of the dollar, which also raised concerns about the labor market. Despite Fitch's downgrade of the US sovereign rating, there was little safe-haven demand for gold. Analysts believe the downgrade will have minimal impact on financial markets and is driven more by concerns about fiscal spending and political controversies.
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The central bank is on track to bring inflation down without causing a recession, said Austan Goolsbee, president of the Chicago Fed. The agency is monitoring the data to assess the possibility of monetary tightening in September.
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According to CME's FedWatch Tool, there is an 83% chance that the Fed will keep rates unchanged at its September meeting. Gold prices are very sensitive to rate hikes. Rising interest rates increase the opportunity cost of holding non-yielding assets like gold.
